The impact of the Covid-19 shutdown on fashion retailing
The financial crisis of 12 years ago wreaked havoc and many retailers didn’t make it. Others completely reinvented themselves and changed their business model to survive. As a health emergency, the Covid-19 outbreak is affecting all consumers in the same way, albeit with different degrees of intensity in terms of economic consequences. The previous recession was not a consumer crisis, but a financial crisis. The 2008 recession started first and foremost with banks and then trickled down to jobs and consumer confidence. What we are living through right now, is more deeply and drastically on a human dimension, its impact is existential anxiety more than financial anxiety. People are worried about their very existence and the survival of their vulnerable loved ones from this global pandemic.
Deep decline in fashion retail sales
According to reports, during the 2 month period of the country’s lockdown period, fashion industry sales declined up to 85 per cent in China. In countries like Italy, France, Spain, the UK and Ireland, the decline has been deeper reaching a 95 per cent fall. This drastic drop represents an existential danger for fashion companies, which are traditionally poor in cash, often dependent on private equity with high debt levels. Many companies in the fashion industry will default in the next 12 weeks. Companies need to prioritise employees and cash flow now, before starting to plan for the post-outbreak recovery. Seeing a recovery in the third quarter of the year and reaching 80-90 per cent of last year's sales in the fourth quarter would be an optimistic situation.
It's not all doom and gloom in fashion retailing
With every cloud there is a silver lining - in the case of fashion retailing this has come in the form of online sales. The increase in online traffic from homebound audiences presents new opportunities, particularly as consumers have more time on their hands. Brands can develop their online profiles and will get the most out of partnerships with influencers who can really engage with the consumer online in a personal way to create a more authentic online experience.
With word of mouth on social media driving purchase decisions, influencer marketing — an 8-billion-euro economy — is unlikely to disappear.
Caroline Daur, who has 2.3 million followers on Instagram and works with luxury brands like Fendi, Dior and Valentino, has pivoted from sharing street style images on corner blocks to posting regular workout videos on Instagram and YouTube. “This is the time to try out new activities that I don’t usually have the time for,” she says. “It has definitely led to a closer relationship with my followers as everyone is in the same situation.” This in turn will lead to maintaining consumer contact.
This leaves us with burning questions....
When will this end? How will we recoup losses? What happens to all the inventory sitting in stores unsold and the stock coming in for the next season? Who will survive? Will it change the way retailers do business going forward?
I am reminded of the line from the Godfather ‘When I think I am almost out, I get sucked back in" – equally we were just getting out of the last recession and its lasting legacy and now ……...
Who knows but it looks like a long road to recovery and all any of us can do now is to use, sense, support and sympathy to stay safe and optimistic.
Becoming a Fashion Buyer or Visual Merchandiser
The key decision makers in the fashion retail sector are the buyers and merchandisers. It is their job to track and analyse market trends and forecast demand. More than ever, their role is critical to the survival and ultimate success of the fashion retailer. The Fashion Buying & Merchandising course in Portobello Institute has been available for over 10 years with students graduating to work for Primark, Brown Thomas, Selfridges to name but a few. All our fashion buying and merchandising courses have moved to online delivery without interruption during the Covid-19 shutdown. Our students, from as far away as New Zealand, are continuing to study and gain their qualifications without disruption.
Upcoming courses for Fashion Buying & Merchandising are;
- Part-time evening - starts 29/04/20 & 01/07/20 for 30 weeks, one evening per week.
- Summer Intensive - starts 01/07/20 for 3 weeks
- Full-time - starts October '20 for 1 academic year, includes work placement.
- Fashion Industry & Design - starts 01/07/20 for 10 weeks, one evening per week
- Fashion Management - full-time, starts October '20 for 1 academic year, includes work placement
We are working remotely and are available to support you with any queries you may have. Please call Brandon on 01-8920035 or email him at email@example.com
About the author
Armed with 20 years’ experience in business and retail training, Annemarie McAuley has worked at senior level with companies such as Saks Fifth Ave (USA), The Body Shop, Claire’s Accessories, The Health Store Group. AnneMarie is also a member of the panel for coaches and mentors for the Dublin Local Enterprise board and Enterprise Ireland specialising in start-ups.
For Annemarie it’s about helping and supporting students to be successful and her commitment to seeing them through to a career in fashion. Her commitment to students is every present with ongoing correspondences from graduates having secured roles as buyers, merchandisers all over the globe.
Listening to market trends and ensuring best learning for students, Annemarie manages a solid team of industry experts and she is heavily involved in the ongoing development of programme content.